Governor Jerry Brown recently signed two pieces of legislation that will impact common interest developments (CIDs) in California. AB 634 restricts the ability of a homeowners association to regulate a homeowner's installation of a solar energy system on a multi-family condominium building roof. SB 407 enumerates specific resident free-speech rights within a CID. Although the legislation regulates homeowners associations, homebuilders should take note because they will be tasked with operating under these new requirements in their capacity as association board members. Homebuilder representatives typically serve on the association board during the initial period of association formation and operation, before turnover to homeowner control.

AB 634. Real Property: Solar Energy Systems

AB 634 is noteworthy because it strengthens a homeowner's right to install a solar energy system on a multi-family condominium building roof. Unlike a single-family residence where the homeowner owns the residential structure and other portions of the lot, the homeowners association will typically own the structural components and roof in a new multi-family condominium building development.

AB 634 prevents the association from establishing a general policy prohibiting the installation or use of a rooftop solar energy system for household purposes on the roof of the building in which the homeowner resides, or on a garage or carport adjacent to the building that has been assigned to the owner for exclusive use. It also prohibits the association from requiring a vote of homeowners for installation of a solar energy system. Under existing law, an affirmative vote of at least 67% of homeowners (or different percentage specified by governing documents) is required before the board may grant exclusive use of a portion of the common area to an individual homeowner. Certain actions, such as disability accommodations, are exempt from this requirement. AB 634 adds the installation of a solar energy system on the common roof to the list of exemptions.

When reviewing an application to install a solar energy system, the association must require that the applicant notify each homeowner in the building and require the applicant and successors to maintain a homeowner liability coverage policy. The association may impose additional reasonable provisions that require the applicant to submit a "solar site survey" that shows the placement of the system and a determination of an equitable allocation of usable solar roof area among all homeowners sharing the same roof, garage or carport. The new legislation preserves the authority of an association to impose "reasonable provisions" to restrict the installation of solar energy systems in common areas to those systems approved by the association and enables the association to require the applicant and successors to be responsible for costs for damage to the common area, and costs for maintenance, repair and replacement of the system.

The installation of solar energy systems on multi-family buildings present a unique set of challenges for homebuilders and homeowners associations alike due to impacts of shared ownership, construction issues, common metering scenarios, affect to other owners, solar lease and power purchase arrangements, and limited roof space for all owners in mid-rise and high-rise buildings. Government regulation of solar energy systems in new homes and homeowners association governance continues to develop, and AB 634 is a significant move along this continuum.

SB 407. Common Interest Developments: Noncommercial Solicitation.

SB 407 clarifies the rights of homeowners in CIDs to engage in non-commercial social, political and educational expression and activities. Although CIDs and the homeowners associations that govern them are legally private in nature, the California courts have recognized that "a homeowners association board is in effect a quasi-government entity paralleling in almost every case the powers, duties, and responsibilities of a municipal government." (See Lee v. Silveira (2016) 6 Cal.App. 5th 527, 539.) In doing so, the courts have applied free-speech doctrine to private CID disputes.

SB 407 adds Civil Code Section 4515 to the Davis-Stirling Common Interest Development Act to enumerate broad homeowner speech and assembly rights. Generally, the statute makes it unlawful for the CID governing documents to prohibit a member or resident from engaging in a variety of activities related to CID living, association elections, legislation, public office elections, and matters of public interest, including peacefully meeting with members, residents, and their guests, inviting public officials or candidates for public office to speak, using the common area for meetings, canvassing and petitioning other residents, and distributing information. The homeowners association must not require a resident to pay a fee, obtain liability insurance or pay a premium or deductible on the homeowners association's insurance policy in order to use the common area to meet for such purposes. A resident's rights are limited by the requirement that such activities take place "during reasonable hours and in a reasonable manner." By way of enforcement, the statute provides that a resident may bring a civil or small claims court action to enjoin the enforcement of a governing document that improperly restricts the resident's rights under the statute. A court may assess a civil penalty of not more than $500 for each violation.